Shipping industry not prepared for biofuel future

By

Karen Remo-Listana

PublishedTuesday, April 29, 2008

The shipping industry must act quickly to prepare for the international drive towards biofuels, as ships will be a critical link in the supply chain and may be encouraged to run on the environmentally friendly energy source, said Lloyd's Register CEO Richard Sadler.

Growing demand for biocargoes will require additional vessels, he said, adding that with increasing environmental pressures, requirements for these ships would further increase.

Citing forecasts from the International Energy Agency's World Energy Outlook, he said biofuel demand may well be inflated by political pressures to find alternative bioenergy.

"The implications for the shipping industry are significant," he said. "Whether biodiesel or bioethanol, shipping will be at the heart of the supply chain and anticipatory investment will have to be made by the industry."

Sadler said contradictory information makes the risk in that investment uncertain. And to hedge the future, flexible initial oil tanker design for vessels should be constructed now and converted in the future to take advantage of the growing biotrade, he added.

"Current ship designs are constrained by present legislation, creating poor designs if biofuel becomes a large-scale global energy source," Sadler said. "New standards may be required to meet essential safety and environmental needs and an early start is essential to meet these challenges."

But the incentives for shipowners need to be established first to encourage more shipping companies to take part in the initiative.

"There are still a number of questions, such as will this provide savings to the owner? At the moment there is plenty of supply of oil here in the region," Dubai-based Aniello Esposito, vice-president for technical operations at National Shipping Company of Saudi Arabia, told Emirates Business.

"We are sensitive to the environment and if this could work then we should all contribute to reduce emissions. But we need to know more, such as how can the manufacturers provide us with biofuels, especially as regards the quantity that we require. Where are they going to get it?" he added.

Esposito said the biofuel trade is a completely new business, especially in shipping. He continued: "I have not heard of other shipping companies in or out of the Middle East that are currently using this kind of fuel."

Currently, the biofuels industry is in the very early stages of low-carbon impact second and third generation biofuel development.

The so-called first generation biofuels relate to biofuels made from sugar or starch, producing bio-ethanol, and vegetable oil or animal fats producing biodiesel. First generation biofuels provoke increasing criticism through their dependence on food crops and issues over biodiversity, land use and human rights.

Second generation biofuels may be the solution to some of the problems related to first generation biofuels. They do not compete directly with food crops because they are made from waste biomass from agriculture and forestry, fast-growing grasses and trees specially grown as energy crops.

Third generation biofuels are green fuels and products made from energy and biomass crops that have been designed in such a way that their structure or properties conform to the requirements of a particular bioconversion process. Another example of a third-generation biofuel is algae fuel, which is formed of waste material such as sewage and slime grown on ponds. Sadler said firms investing time and money in developing technology into economically viable and socially acceptable solutions are naturally keeping quiet about the technology or products being developed.

"Whether as a cargo or for use in the engine room, these new solutions will have to be incorporated into marine systems," he said.

If second- and third-generation technologies are successful then current projections of demand would see the world fleet unable to cope with the logistics.

The use of biofuels was first tried in land transport. Worldwide, the use of biofuels for cars and public vehicles has grown significantly. On January 15, 2006, the Central Ohio Transit Authority (Cota) in the United States began a programme to test a 20 per cent blend of biodiesel (B20) in its buses. In two months it used approximately 45,000 gallons of B20. As a result of the test, in April 2006 Cota began using biodiesel fleet-wide. In addition to using B20 in the winter months, Cota has committed to using 50 to 90 per cent biodiesel blends (B50-B90) during the summer months.

The first trial of buses in the United Kingdom running on B100 was launched in October last year. In a pilot project, Argent Energy (UK) Limited worked with Stagecoach to supply biodiesel made by recycling and processing animal fat and used cooking oil.

Last year, Ford announced a £1 billion (Dh7.28bn) research project to convert more of its vehicles to new biofuel sources.

Meanwhile, BP Australia has now sold more than 100 million litres of 10 per cent ethanol content fuel to motorists and Brazil sells both 22 per cent ethanol petrol nationwide and 100 per cent ethanol to more than four million cars.

In air transport, Virgin Atlantic is running a project in conjunction with Boeing and General Electric to try alternative fuels in its aircraft. A successful test flight from London to Amsterdam took place in February, running one of the four jumbo jet engines on a mixture of 20 per cent coconut oil and babassu nut oil, with 80 per cent conventional jet fuel.

In shipping, Royal Caribbean Cruise Lines has used a palm oil-based biodiesel on a trial basis since 2005. It then signed a contract in August 2007 for the delivery of a minimum 15 million gallons and for the four years after, a minimum of 18 million gallons of biodiesel for its cruise ships.

"It must be remembered that this technology is in the early stages of development but any breakthrough would have a major impact on shipping requirements," Sadler said. "The individual sectors are preparing themselves technically for inevitable changes. Global energy demands and political debate add further pressures to find alternative bioenergy in shortening timescales.

"All this means that shipping demand could be caught ill-prepared for any rapid change in demand or supply of biofuel."